Telecom giants Verizon, T-Mobile, and AT&T experienced significant stock declines on Friday after SpaceX announced its acquisition of a nationwide spectrum portfolio, a move expected to enhance its Starlink mobile service. Verizon recorded its worst day since 2002, while its competitors also saw substantial losses. FCC Chair Brendan Carr commented that the increased competition in the spectrum market is a positive development for American consumers.
SpaceX Spectrum Deal Sends Telecom Stocks Plunging; Verizon Suffers Worst Day Since 2002
Published: October 27, 2023
Key Takeaways
- Telecom stocks experienced a significant downturn on Friday following SpaceX's announcement of a nationwide spectrum portfolio acquisition.
- Verizon, T-Mobile, and AT&T saw substantial stock drops, while SpaceX shares saw a modest increase.
- FCC Chair Brendan Carr commented that increased competition in the spectrum market is beneficial for American consumers.
The U.S. telecommunications sector was rocked on Friday as Elon Musk's SpaceX announced a significant move to acquire a nationwide spectrum portfolio. This strategic acquisition aims to bolster SpaceX's Starlink internet service by enabling direct mobile service integration, sending shockwaves through the stocks of established mobile providers.
Verizon experienced its most brutal trading day since July 2002, closing down 8.75%. Competitors were not spared, with T-Mobile shares plummeting 13.27% and AT&T falling 9.81%. These drops marked the worst days for T-Mobile since 2013 and AT&T since 2000, respectively.
In contrast, SpaceX stock saw a slight uptick, climbing around 1% for the day. The deal involves acquiring spectrum licenses from Grain Management, described by SpaceX as a "license portfolio of up to 14 megahertz of paired spectrum in the 800 MHz band."
FCC Chair Brendan Carr, whose agency will review the transaction, highlighted the positive implications of increased competition. "We're probably going to bring over $100 billion of spectrum into the market over the next two years, so we're seeing a lot of competition," Carr told CNBC's "Squawk on the Street." He added, "There's going to be moves in the market. People are going to try to out-compete, out-innovate, and I think that's great. We're going to see how this plays out. It's not for us ultimately to pick winners and losers."
Analysts generally viewed the move positively for SpaceX. Evercore ISI noted that the rocket company "now has the outline of a real network" complementing its satellite capabilities. JPMorgan echoed this sentiment, stating the acquisition makes Starlink Mobile's long-term potential "more credible." However, they also advised that the near-term risk to existing U.S. wireless providers remains limited due to the substantial time, infrastructure, and capital required to build a competing terrestrial network.
Verizon, AT&T, and T-Mobile stock chart.
